2019 Ohio 5275
Ohio Ct. App.2019Background
- In 2008 John and Dawn Henderson (Ohio residents) responded to an SMC national infomercial, called SMC (California), and purchased a basic membership ($264.95) and an upgraded package ($5,195) to obtain catalogs, coaching, and a hosted e‑commerce site; they canceled within 30 days and received a $264.95 refund but not the $5,195.
- Plaintiffs sued in Ohio in 2009; the trial court entered a default judgment (2009) and later awarded damages (2012).
- Appellees (SMC and affiliates) first moved (2013) to vacate the default judgment for lack of personal jurisdiction; this court remanded (2014) for the Fraley two‑step jurisdictional analysis.
- On remand the trial court (2017) concluded SMC had transacted business under Ohio’s long‑arm statute but that exercising jurisdiction would violate due process; the court also treated forum‑selection/arbitration provisions as weighing against Ohio jurisdiction.
- This appeal challenges the trial court’s lack‑of‑jurisdiction ruling and related rulings on the forum‑selection clause, deemed admissions, and damages; the Sixth District affirmed the trial court. A separate concurrence emphasized standards of review; the presiding judge dissented arguing Ohio had specific jurisdiction and that SMC failed to prove the forum clause existed in June 2008.
Issues
| Issue | Plaintiff's Argument (Henderson) | Defendant's Argument (SMC) | Held |
|---|---|---|---|
| Personal jurisdiction — long‑arm (R.C. 2307.382 / Civ.R. 4.3) | SMC transacted business in Ohio via national infomercials, telephone follow‑ups, membership sales and delivery of materials | SMC operated from California; contacts with Ohio were limited and initiated by plaintiffs | Court: Plaintiffs met the long‑arm showing for SMC (R.C. 2307.382(A)(1)) but not for affiliates; trial court did not abuse discretion on factual findings |
| Personal jurisdiction — due process / minimum contacts (specific jurisdiction) | Contacts (upsell call, shipment of materials, promised coaching and website work) arose from SMC and gave rise to plaintiffs’ claims | No purposeful availment: national ads not targeted to Ohio; plaintiffs initiated contact; most performance and payments centered in California | Court: No specific jurisdiction — plaintiffs failed by preponderance to show purposeful availment or that jurisdiction would comport with due process; judgment vacated as void was properly set aside |
| Enforceability of forum‑selection clause (California, arbitration) | Plaintiffs: never manifested assent to online rules containing the clause; no evidence they agreed to those terms in 2008 | SMC: membership rules (with exclusive Los Angeles forum and arbitration clause) govern and show defendants did not expect litigation in Ohio | Court: After de novo review, forum‑selection clause was valid and not shown to be fraudulently procured or unjust to enforce; its existence weighed against Ohio jurisdiction; plaintiffs failed to show clause invalid |
| Discovery admissions & damages (requests for admission; lost profits/punitive) | Unanswered requests for admission should have deemed high damages admitted; plaintiffs’ expert established lost profits | Trial court: damages were unliquidated; Civ.R. 55(A) permits hearing; expert speculations lacked reasonable certainty | Court: declined to reach merits of third and fourth assignments given jurisdictional ruling; lower court correctly required proof of unliquidated damages and rejected speculative lost‑profits/punitive requests (trial‑court discretion affirmed) |
Key Cases Cited
- Fraley v. Estate of Oeding, 6 N.E.3d 9 (Ohio 2014) (two‑step test for long‑arm statute then due‑process analysis)
- Kentucky Oaks Mall Co. v. Mitchell’s Formal Wear, Inc., 559 N.E.2d 477 (Ohio 1990) (interpretation of “transacting any business” for long‑arm jurisdiction)
- Kauffman Racing Equip., L.L.C. v. Roberts, 930 N.E.2d 784 (Ohio 2010) (Ohio standards for specific and general jurisdiction; purposeful availment analysis)
- Internat’l Shoe Co. v. Washington, 326 U.S. 310 (U.S. 1945) (minimum contacts / due process framework)
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (U.S. 1985) (purposeful availment and foreseeability principles)
- Walden v. Fiore, 571 U.S. 277 (U.S. 2014) (limitations on relationship between defendant’s forum contacts and plaintiff’s forum connections)
- Daimler AG v. Bauman, 571 U.S. 117 (U.S. 2014) (narrowing of general jurisdiction standard)
- Preferred Capital, Inc. v. Power Eng. Group, Inc., 860 N.E.2d 741 (Ohio 2007) (commercial forum‑selection clause enforceability test)
- Kennecorp Mtge. Brokers, Inc. v. Country Club Convalescent Hosp., Inc., 610 N.E.2d 987 (Ohio 1993) (forum‑selection clause and consent to jurisdiction)